China urged to free up yuan exchange rate

Chris Papadopoullos was City A.M.'s economics reporter until February 2016.

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Chris Papadopoullos

CHINA needs to allow greater flexibility in its exchange rate, the International Monetary Fund (IMF) said yesterday.

“Exchange rate policy should continue to allow greater flexibility by reducing foreign exchange intervention,” the IMF said in its economic outlook for the Asia Pacific.

It also said China needed to “reorient the economy away from excessive reliance on real estate, heavy industry, and external demand”, in order to achieve durable and balanced growth.

Annual economic growth in the world’s second largest economy is expected to continue slowing, reaching six per cent by 2017. It would be a long way off the double-digit annual growth rates China experienced before 2008. The moderation in growth is expected to occur as the country undertakes reforms to reduce corporate debt and reform state-owned enterprises.